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How Dumb is Your Business?

How Dumb is Your Business

How dumb is your business? At the risk of drawing the ire of corporate elitists, I submit to you that the dumber your business is, the better off you are. The truth is that great companies are those which can thrive and prosper in the absence of sophistication. As odd as it sounds, businesses that are not dependant on smart talent, capital, or technology can scale faster and easier than those businesses burdened with the aforementioned dependencies. In today’s post I’ll share why I believe dumb is the new smart…

The simple truth of the matter is that if your business requires smart money (which equals expensive money), or your competitive advantage is tied to a superhero key employee, or your business is built around maintaining a technology advantage, you have more weakness in your business model than you do strengths.

Let’s drill down on the talent argument a bit deeper. I’m not suggesting for a moment that you don’t want to hire tier-one talent. However I am clearly stating that you don’t want to be dependant upon tier-one talent. Talent is clearly a plus as long as it is a value add and not a business requirement. If your company’s long-term business plan requires the acquisition, or retention of the uber employee then your business not only has a risk management issue, but it is likely not scalable. If your company can’t be operated by mere mortals, you need to reexamine your business logic. Here is a simple rule of thumb…the bigger the key man policy the less scalable the company is.

The dumb factor not only applies to talent, capital, and technology, but it also extends throughout the entire value chain. It applies to your branding, marketing, supply chain, and ultimately to your customer base. If your customer has to be a rocket scientist to understand your value proposition you have problems. If your employees cannot simply and effectively explain what you do you have problems.

The last point I want to cover is that of growth as it relates to dumb businesses. Both scalable and non-scalable businesses can achieve growth and sustainable success. However it is important to understand the distinction between the two.  While a business cannot scale without growth, a business can grow without being scalable. If your business model requires implicit customer growth your business might grow for a time period certain, but it isn’t scalable.

The moral of this story is that while sophistication and complexity often go hand-in-hand, they don’t have to be synonymous. Focus on driving-down the most complex tasks to the lowest levels of the organization, and then leverage with talent, capital and technology while avoiding the creation of margin eroding dependencies.

Related Post: Keeping it Simple  

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    Dan Collins

    October 13, 2010 at 9:38 am

    Excellent – Simple, Scalable and Succinct Advice. "Simplicity is the ultimate sophistication" Da Vinci

      mikemyatt

      October 13, 2010 at 10:02 am

      Thanks Dan…I take great personal inspiration from the quote you cited. I've found that simplicity enables success, where complexity often times serves as a barrier. Thanks for sharing Dan.

    Tanveer Naseer

    October 13, 2010 at 10:25 am

    Mike, your piece is a great reminder for organizations to not obsess over their processes or their top talent, but to focus instead on what the purpose is behind their organization.

    Having such a sharp focus ensures you can better whittle down the complexity of processes/interactions, as well as ensuring you don't become too dependent either on your top talent or even on your bigger customers, which can cause you to shift your goals to better suit their needs instead of your purpose.

      mikemyatt

      October 13, 2010 at 10:38 am

      Well said Tanveer. I find that all too often companies sacrifice what's truly important on the altars of incremental process improvement or complex implementations. What's interesting is that these pursuits often lead them astray by taking them farther away from their goals, rather than moving them closer to their attainment. Thanks for the great insights Tanveer.

    Todd

    October 13, 2010 at 11:42 am

    Yes, truth, focus, and speed are all found through simplicity. Take Facebook or Twitter. Simple model. Their struggles to grow are now tempting them with complexity. We'll see how they respond–can they stay 'dumb' and stay ahead.

      mikemyatt

      October 13, 2010 at 3:46 pm

      Astute observations Todd…It is human nature to over complicate things. What's funny is that it really doesn't matter what the motivations are for doing so, the outcomes are rarely good. You can absolutely stay dumb and stay ahead, but it requires focus and discipline not to succumb to temptation. Thanks for sharing Todd.

    Sune

    October 15, 2010 at 2:26 am

    Great reminder, Mike

    Just as long as everybody also keeps in mind that while sophistication and complexity are not synonyms neither are dumb and simple.
    In my time I’ve worked several places that were so dumb that we couldn’t make the simplest things work.

    I have also had the pleasure of working in a place that almost never accepted a solution unless we made it simpler than what was the first version.

    It was a pain by then but during the rest of my career that mentality has stuck with me and I found that its always easier comming up with the simple solution in the first place rather than dealing with complex workflows until you have had enough and go back to simplify it.
    Also it strike me that the time it takes from you realize something is too complicated until you stop and come up with another way is always too long.
    Why is it so hard for us to admit we were wrong and rethink what we’re doing?

      mikemyatt

      October 15, 2010 at 11:26 am

      Hi Sune:

      You said "Just as long as everybody also keeps in mind that while sophistication and complexity are not synonyms neither are dumb and simple. In my time I've worked several places that were so dumb that we couldn't make the simplest things work." I agree completely…Thanks for the refining thoughts.

    Mark Vickers

    October 15, 2010 at 6:44 am

    Do you have any data to support this? When I look at top performing organizations, many of them rely on “smart talent” and relatively complex business models. Take Google, for example. I’d love to see research sources supporting your contention, which is an interesting one. Thanks, Mark Vickers

      mikemyatt

      October 15, 2010 at 11:32 am

      Hi Mark:

      Thanks for your comments. My conclusions are drawn from 30 years of observational and experiential analysis. Interestingly enough, I think your example of Google is a great one. When Google started they had the greatest focus, the simplest vision, and the least cluttered search engine. It was exactly the simplicity of their business model and their product that made them into the company that they are today. Even their advertising model is simplistically brilliant. What's interesting is that many of their latest ventures have strayed from their historically simple roots into areas of great complexity. It will be interesting to see if the next round of Google innovation will be as successful as the beauty of their initial simplicity.

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